Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. FURMANITE CORP (54441) 10-Q published on Nov 06, 2015 at 3:38 pm
Reporting Period: Sep 29, 2015
Furmanite America was involved in disputes with a customer, INEOS USA LLC (“INEOS”), which claimed that Furmanite America failed to provide it with satisfactory services at the customer’s facilities. On October 26, 2015, the parties entered into a settlement agreement, disposing of all claims under this matter for $2.1 million. As of September 30, 2015, this settlement payment amount to INEOS had been accrued in full in the Company’s consolidated financial statements.
On February 27, 2015, Norfolk County Retirement System (the “Plaintiff”) filed a putative stockholder class and derivative action (the “Action”) in the Court of Chancery of the State of Delaware (the “Delaware Court”) against the then-members of the Company’s Board of Directors (the “Board”) (Sangwoo Ahn, Kathleen Cochran, Kevin Jost, Joseph Milliron and Ralph Patitucci, collectively “the Defendants”), claiming that a certain provision of the Company’s now-expired stockholder rights plan was unenforceable and that the Defendants had breached their fiduciary duties with respect to certain corporate governance matters. Due to certain actions taken by the Company in March 2015, the Plaintiff’s claims became muted. In June 2015, the parties entered into an agreement under which the Company would pay Plaintiff’s counsel $0.3 million in attorneys’ fees and expenses, and the parties requested that the Delaware Court close the Action. On July 6, 2015, the Delaware Court issued an order closing the Action, subject to the Company completing certain actions, which it has done, thereby closing the Action.
On November 1, 2015, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Team, Inc. (“Team”) and Team’s wholly owned subsidiary TFA, Inc. (“Merger Sub”) whereby, upon the terms and subject to the conditions of the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”), with the Company continuing as the surviving corporation in the Merger and a wholly owned subsidiary of Team. The Merger Agreement was unanimously approved and adopted by the Board of Directors of each of the Company and Team. At the effective time of the Merger, each share of the Company’s common stock will be converted into the right to receive 0.215 shares of common stock of Team. The parties’ obligations to complete the Merger are subject to several customary conditions, including, among others, approval of the Merger by the Company’s stockholders and approval of the issuance of Team common stock in the Merger by Team’s stockholders, the receipt of certain regulatory approvals (including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and other customary closing conditions. Additionally, the Merger Agreement provides that upon termination of the Merger Agreement under certain circumstances, the Company or Team, as applicable, will be obligated to (depending on the circumstances of termination) pay a termination fee of $10.0 million or reimburse the other party’s reasonable documented merger-related expenses up to $3.0 million.
Consolidated revenues from continuing operations decreased $10.8 million, or 3.5%, to $296.5 million for the nine months ended September 30, 2015, but increased $2.2 million, or 2.4%, to $97.4 million for the three months ended September 30, 2015, compared to the prior year periods. Revenues in the Technical Services segment were adversely affected by foreign exchange rate changes, which resulted in unfavorable impacts of $5.2 million and $15.4 million for the three and nine months ended September 30, 2015, respectively, compared to the prior year periods due to strengthening of the U.S. Dollar against most of the functional currencies in the countries in which the Company operates. Excluding the foreign currency impacts for the nine months ended September 30, 2015, decreases in revenues in the EMEA region of the Technical Services segment and, to a lesser extent, the Americas were partially offset by higher revenues in Asia-Pacific. For the three months ended September 30, 2015, excluding the foreign currency impact, revenue increases in the Americas and Asia-Pacific, were partially offset by lower revenues in EMEA. Revenues in the Engineering & Project Solutions operating segment increased during both the three and nine months ended September 30, 2015, compared to the same periods in 2014, reflecting substantial volume increases in process management inspection services.
In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in the ASU change the balance sheet presentation requirements for debt issuance costs by requiring them to be presented as a direct reduction to the carrying amount of the related debt liability. The amendments are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. Transitioning to the new guidance requires retrospective application. However, in August 2015 the FASB issued ASU No. 2015-15, Interest—Imputation of Interest (Subtopic 835-30) - Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements (Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting), which codifies certain SEC Staff views on the presentation of debt issuance costs associated with line-of-credit arrangements. The SEC Staff has stated that it will not object to the presentation of debt issuance costs associated with line-of-credit arrangements as assets, regardless of whether any borrowings are outstanding. Currently, all of the Company’s debt issuance costs pertain to its line-of-credit arrangement; therefore, the Company intends to continue recording these unamortized costs as assets rather than using the approach set forth in ASU No. 2015-03. Accordingly, the Company does not expect the adoption of ASU No. 2015-03 and ASU No. 2015-15 to have any effect on its consolidated financial statements.
On November 1, 2015, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Team, Inc. (“Team”) and its wholly owned subsidiary TFA, Inc (“Merger Sub”) whereby, upon the terms and subject to the conditions of the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”), with the Company continuing as the surviving corporation in the Merger and a wholly owned subsidiary of Team. Consummation of the Merger is subject to customary closing conditions, including regulatory approvals (including expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended), and approval by the Company’s stockholders and approval of the issuance of Team common stock in the Merger by Team’s stockholders. There can be no assurance that these conditions will be satisfactorily met or waived, as applicable, that the necessary approvals will be obtained or that the Company and Team will be able to successfully consummate the Merger as provided for under the Merger Agreement, or at all.